The past year has been one of change for The University of Western Australia as we adjusted to greater pressures on the higher education sector. However, I am pleased to report that the University has continued to deliver excellence in teaching, research and community engagement and we can be proud of how much has been accomplished.

The University faced a challenging financial environment caused by continuing constraints on public funding, increasing domestic and international competition for students and a 'half cohort' of Western Australian school leavers entering higher education in 2015. The underlying financial result for 2015 was a deficit of $4 million and that is why we are working hard to generate resources within the University for reinvestment into the future. The events of the past year have shown that we cannot rely on outside forces to secure our future.

Generating an operating surplus is important for the University. Achieving the right balance of income and expenditure is essential for the long-term sustainability and success of UWA. Unlike a commercial business, we do not aim to generate a profit that can be distributed to owners (shareholders), but we do need to create a surplus which we can reinvest in the University. These surpluses represent a 'future fund' which allows us to introduce innovative approaches to teaching, initiate new research programs, upgrade or replace our buildings and IT systems and provide more scholarships.

While the University is fortunate in having generous benefactors and a large endowment portfolio, most of these funds are required to be directed to specific scholarships and programs. The University's ability to reinvest in research, physical and IT infrastructure upgrades, and key academic and student services is determined by its underlying financial performance. The University needs to improve its capability in this area so that we can expand and enhance our core teaching and research activities.

Significant work is already taking place to tackle the revenue challenge. This includes projects focused on improving the efficiency and effectiveness of our internal operations as well as the development of new partnerships to increase our international student numbers.

This year we have also made good progress towards improving the quality of the educational experience with the University launching the Centre for Education Futures. The centre uses the latest technology to support quality teaching and learning for staff and students.

These internal changes have been matched by our engagement with the Government's national innovation agenda. In 2015 we launched the UWA Innovation Quarter (IQ) initiative.

IQ aims to grow innovation and industry engagement by providing new facilities and resources for students and staff to develop their novel concepts and ideas.

UWA holds a special place in the Western Australian community as the State's first University and the only local university to be ranked in the world's top 100. At the heart of this University is our purpose: to provide world-class education, research and community engagement to 'advance the prosperity and welfare of the people'. I would like to thank the many staff, students, alumni, friends of the University and wider community for their ongoing support and involvement. Without them the many successes of 2015 would not have been possible.